Micron Technology Reports Lower-than-Expected Revenue Forecast
Micron Technology, the largest US maker of computer memory chips, tumbled in late trading after its revenue forecast missed projections by about US$1 billion, hurt by sluggish demand for smartphones and personal computers (PC).
Revenue Forecast Misses Projections
Sales will be roughly US$7.9 billion in the fiscal second quarter, which runs to February, the company said on Wednesday (Dec 18). That compares with an average analyst estimate of US$8.99 billion. Profit will be no more than US$1.53 a share, minus certain items, well short of the US$1.92 projection.
Challenges in Consumer-Oriented Markets
Though Micron is seeing strong orders for components used in artificial intelligence (AI) computing, it still faces lacklustre demand from makers of phones and PCs – two markets that consume the majority of its chip volume.
Impact on Shares
Micron shares, up 22 per cent this year to Wednesday’s close, tumbled 11 per cent in extended trading following the announcement.
CEO’s Statement
“While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year,” chief executive officer Sanjay Mehrotra said.
First Quarter Results
In the fiscal first quarter, which ended Nov 28, sales rose 84 per cent to US$8.71 billion. Excluding certain items, the profit was US$1.79 per share. Analysts had predicted sales of US$8.71 billion and profit of US$1.76 on average.
Data Centre-Related Revenue Growth
The company said that data centre-related revenue grew 400 per cent in the quarter from a year earlier. That unit now accounts for more than half of the company’s total sales.
Outlook for Fiscal 2025
For fiscal 2025, the chipmaker is budgeting spending on new plants and equipment of US$14 billion. That amount includes a reduction in its planned outlay on new production for storage chips.
Conclusion
Micron Technology’s revenue forecast miss is a setback for the company, but its strong orders for AI computing components and data centre-related revenue growth provide some optimism. The company’s shares tumbled in extended trading, but its CEO remains confident in the company’s ability to return to growth in the second half of the fiscal year.
Frequently Asked Questions
Q: What was Micron Technology’s revenue forecast for the fiscal second quarter?
Roughly US$7.9 billion, missing analyst estimates by about US$1 billion.
Q: What was the reason for the revenue forecast miss?
Sluggish demand for smartphones and personal computers (PC), two markets that consume the majority of its chip volume.
Q: How did Micron Technology’s shares react to the announcement?
Micron shares tumbled 11 per cent in extended trading following the announcement.
Q: What is Micron Technology’s outlook for fiscal 2025?
The company is budgeting spending on new plants and equipment of US$14 billion, including a reduction in its planned outlay on new production for storage chips.
